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Covid-19 energy recovery plan relies too much on status quo

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Greater ambition is needed if the world is to take advantage of coming out of the coronavirus epidemic to accelerate a shift to renewable energy.

The International Energy Agency’s flagship Sustainable Recovery Plan, published last week, sets out how we can revitalise our economies and boost employment while making energy systems cleaner and more resilient.

There are many constructive aspects to the plan, which makes a clear case for the need to exponentially scale-up low-cost, low-carbon wind and solar, and to incentivise flexibility as the vital keystone in the transition to 100 per cent renewable energy.

However, the scope of the report is too limited. It focuses on using short-term improvements to existing energy systems over the next three years to jump-start the global economy, rather than addressing the profound structural changes that are necessary to stabilise climate change within the Paris target of 1.5°C by 2050.

The need for immediate action is unquestionable, but it has to be underpinned by a long-term vision of the future that accelerates the shift to cleaner energy.

The Covid-19 coronavirus has created a once-in-a-generation opportunity to transform energy grids worldwide and create a future-proof system where the power sector is greener, more efficient, more robust and affordable for all.

It has also helped us to understand what that future could look like. Europe’s energy system was 20 per cent less carbon intensive in May 2020 compared to May 2019 and renewable records have fallen like dominos, as shown by Wartsila’s Energy Transition Lab. Furthermore, as the IEA report shows, wind and solar “...have shown a degree of immunity to the Covid-19 crisis”.

The impact of this global crisis on energy systems has clearly demonstrated that flexible power assets such as energy storage and flexible power plants are essential to enabling greater renewable penetration.

Countries with greater flexibility built into their power grids have been able to manage the sudden increase in renewable penetration far more effectively than those without. For example, Germany has been forced to sell surplus power for as little as €80 per MWh to countries such as Norway. In the UK, prices for energy from storage have been up to 20 per cent higher during the past two months.

Flexibility must be at the heart of our energy systems in order to deliver a cost-optimal 100 per cent renewable future. However, this isn’t reflected adequately in the IEA report. Instead, it emphasises a continuation of the status quo – with nuclear and clean coal highlighted as viable future options, despite these legacy technologies being out of step with the transition to 100 per cent renewable energy systems.

The IEA report considers electricity, heating and transport, but doesn’t explain how these sectors are increasingly interdependent through the electrification of transport, heating and fuel production – a process known as sector coupling.

Studies have shown that energy-system integration and sector coupling could substantially reduce the overall costs of decarbonisation. For Germany, it has been estimated that the transition to a well-integrated energy system in 2050 would be €600bn cheaper than a system that is strongly dependent on electricity only.

And while the report does consider the future potential for hydrogen, it doesn’t look at the wider scope for synthetic future-fuels, created from excess renewable energy, which can provide the cost-optimal flexibility we will need to bridge the final gap in the future energy transition.

The technology is already available to achieve 100 per cent renewable energy – a feat almost witnessed in Germany last month. Supported by battery storage as well as flexible generation running on renewable and synthetic fuels produced with power-to-x processes, we could achieve cheaper, cleaner energy systems far sooner and make a meaningful impact on climate change.

We are hopeful that the IEA’s historic report will encourage governments to implement the smart policy needed now to break the cycle of incrementalism and realise the transition to an affordable energy system built with a 100 per cent renewable, flexible energy mix.

Saara Kujala is general manager, business development for Wärtsilä.

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